Regions to impose taxes under federal gov’t

Under a proposed Philippine federal government, both the national and regional governments would have the power to impose taxes and exercise control over their respective budgets, while at the same time making sure that no double taxation will happen.

The consultative committee (Concom) reviewing the 1987 Constitution had proposed that certain taxes being charged by the Bureau of Internal Revenue (BIR) be transferred to the regional governments, said Concom spokesman Ding Generoso.

According to the Concom’s proposal, the federal national government still has “the power to levy and collect all taxes, duties, fees and other impositions.” The same provision further noted the transfer of certain taxes and fees to the regions, with the phrase “except those granted in federated regions.”

Generoso named these taxes and fees that the Concom proposes to be transferred to the regional governments as follows: estate tax, donor’s tax, documentary stamp tax, professional tax, games and amusement tax, environmental and pollution tax and similar taxes, road user’s tax, transport franchise and driver’s license fees, and local and other taxes that may be granted by federal law.

The taxes could be charged by the regional governments since these transactions happen in a particular locality, Generoso noted.

He said these taxes would benefit the regions more and would no longer be charged by a national agency based in Manila.

“Later on, as we go along and as we see the regions developing and becoming economically sustainable and viable, Congress may, by law, give them additional taxation powers,” he added.

With the setup, Generoso said that the Concom estimates that between P40 billion and P50 billion worth of taxes and fees will be in the hands of the regions, depending on the level of economic activity.

Generoso also gave assurance that no double taxation would happen under the federal government.

Anchored on the idea that federalism – under the Concom’s proposal – promotes distribution of power to the regions, he said that transferring certain taxes to the regions could promote “cooperative competition.”

“If you want to generate investments in the region, will you impose additional taxes so you become competitive against other regions? No, because they have to reckon with being able to cooperatively compete with the other regions for investments and business activity,” he said.

Besides, the Concom also proposes that whenever Congress enacts taxation laws, they must make sure that taxes imposed by these laws would be “uniform, equitable and progressive,” whether national or regional.

The federal regions, the Concom also proposed, will also have the power to create their own budgetary requirements.

“Regional governments can now attend to the priorities and needs of their constituents faster, more effectively and efficiently,” Generoso also said.

This kind of setup can shorten the budgeting period between one and a half to two years, unlike the current process of approval of budget for government programs and projects, which Generoso explained could take up to three years.

To achieve the shortened budgeting process, the regional legislative assemblies “would now have to create their own formula” for sharing revenues with the provinces and highly urbanized cities.